Santa fe grill mexican restaurant case study

Market Research Assginment

MARKETING RESEARCH IN ACTION Continuing Case: The Santa Fe Grill

The Santa Fe Grill Mexican restaurant was started 18 months ago by two former business students at the University of Nebraska, Lincoln. They had been roommates in college and both wanted to become entrepreneurs. After graduating they wanted to start a business instead of working for someone else. The students worked in restaurants while attending college, both as waiters and one as an assistant manager, and believed they had the knowl- edge and experience necessary to start their own business.

During their senior year they prepared a business plan in their entrepreneurship class for a new Mexican restaurant concept. They intended to start the restaurant in Lincoln, Nebraska. After a demographic analysis of that market, however, they decided that Lincoln did not match their target demographics as well as they initially thought it would.

After researching the demographic and competitive profile of several markets, they decided Dallas, Texas, would be the best place to start their business. In examining the mar- kets, they were looking for a town that would best fit their target market of singles and fam- ilies in the age range of 18 to 50. The population of Dallas was almost 5.5 million people, of which about 50 percent were between the ages of 25 and 60. This indicated there were a lot of individuals in their target market in the Dallas area. They also found that about 55 percent of the population earn between $35,000 and $75,000 a year, which indicated the market would have enough income to eat out regularly. Finally, 56 percent of the popula- tion was married, and many of them had children at home, which was consistent with their target market. More detailed demographic information for the area is shown below.

The new restaurant concept was based upon the freshest ingredients, complemented by a festive atmosphere, friendly service, and cutting-edge advertising and marketing strat- egies. The key would be to prepare and serve the freshest "made-from-scratch" Mexican foods possible. Everything would be prepared fresh every single day. In addition to their freshness concept, they wanted to have a fun, festive atmosphere, and fast, friendly service. The atmosphere would be open, brightly lit, and b.ustling with activity. Their target market would be mostly families with children, between the ages of 18 to 49. Their marketing pro- grams would be memorable, with the advertising designed to provide an appealing, slightly offbeat positioning in the market.

The Santa Fe Grill was not successful as quickly as the owners had anticipated. To improve the restaurant operations, the owners needed to understand what aspects of the restaurant drive customer satisfaction and loyalty, and where they were falling short in serving their customers. So they decided to conduct three surveys. One was designed to obtain information from current customers of the Santa Fe Grill. A second survey would collect information from customers of their primary competitor, Jose's Southwestern Cafe. The third survey was designed to collect data from the employees who worked for the Santa Fe Grill. They believed the employee survey was important because employee experiences might be affecting how customers evaluated the restaurant.

The Santa Fe Grill was located on an outparcel on the east side near the main entrance of the Cumberland Mall. The mall has 75 or more stores and is considered very successful for the area. A market research company was located in the mall so they decided to use a mall intercept approach to collect customer data. Another Mexican restaurant that had been in business longer and appeared to be more successful was also on an outparcel at the same mall, but its location was on the west side of the mall. The goal was to complete

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Chapter 1 Marketing Research for Managerial Decision Making

interviews with 250 individuals who had recently eaten at the Santa Fe Grill and 150 diners who had recently eaten at Jose's Southwestern Cafe. Additionally, employees of the Santa Fe Grill were asked to log on to a website to complete the employee survey.

Over a period of two weeks, a total of 405 customer interviews were completed- 152 for Jose's and 253 for the Santa Fe Grill. Of the employee survey, 77 questionnaires were completed. The owners believe the surveys will help them to identify the restaurant's strengths and weaknesses, enable them to compare their restaurant to a nearby competitor, and develop a plan to improve the restaurant's operations.

Selected Demographics for Geographic Area (10-mile radius of Santa Fe Grill)

Households by Type

Total households Family households

With children under 18 years Non-Family households.

Householder living alone Householder 65 years and over

Households with individuals under 18 years Households with individuals 65 years and over Average household size Average family size

Gender and Age

Male Female

Total Under 20 years 20 to 34 years 35 to 44 years 45 to 54 years 55 to 59 years 60 years and over Median Age (years) 18 years and over

Hands-On Exercise

Number

452,000 267,000 137,000 185,000 148,850

29,570 157,850 74,250

2.6 people 3.4 people

Number

599,000 589,000

1,188,000 98,800

342,000 184,000 132,500 44,250 13,000

32 873,000

Percent

100 59 30 41 33 7

35 16

Percent

51 49

29 29 16 11 4 11

74

1. Based on your understanding of Chapter 1, what kind of information about products, services and customers should the owners of Santa Fe Grill consider collecting?

2. Is a research project actually needed? Is the best approach a survey of customers? Should employees also be surveyed? Why or why not?

Chapter l Secondary Data, Literature Reviews, and Hypothese'S

MARKETING RESEARCH IN ACTION The Santa Fe Grill Mexican Restaurant

The owners of the Santa Fe Grill Mexican Restaurant were not happy with the slow growth rate of the restaurant's operations and realized they needed to obtain a better understanding of three important concepts: customer satisfaction, restaurant store image, and customer loyalty. Using, in part, their practical business knowledge and what they learned as business students at the University of Nebraska, Lincoln, they developed several key questions:

1. What makes up customer satisfaction? 2. How are restaurant images created? 3. How is customer loyalty achieved? 4. What are the interrelationships between customer satisfaction, store images, and cus-

tomer loyalty?

Not really knowing where to begin, they contacted one of their past professors, who taught marketing research at the university, to gain some guidance. Their professor sug- gested they begin with a literature review of both scholarly and popular press research sources. Using their Internet search skills, they went to Google Scholar (www.Scholar .Google.com) and Business 2.0 (www.Business2.com) and found there a wealth of past research and popular press articles on customer satisfaction, store image, and customer loyalty.

After reviewing a number of articles, the owners understood that customer satisfaction relates to a restaurant's ability to meet or exceed its customers' dining expectations about a variety of important restaurant attributes such as food quality, acceptable service, competi- tive prices, restaurant atmosphere, and friendly/courteous staff. Regarding restaurant store image, they learned that image is really an overall impression expressed in either a posi- tive or negative judgment about the restaurant's operations. In addition, customer loyalty reflects customers' willingness to "recommend a restaurant to their friends, family, and/or neighbors;' as well as provide positive word of mouth.

Hands-On Exercise 1. Based on your understanding of the material presented in Chapter 3 and the above key

research questions, should the owners of the Santa Fe Grill Mexican restaurant go back and restate their questions? If "no;' why not? If "yes:' why? Suggest how the research questions could be restated.

2. Regarding the owners' desire to understand the interrelationships between customer satisfaction, restaurant store image, and customer loyalty, develop a set of hypotheses that might be used to investigate these interrelationships.